The Bank of Israel Monetary Committee, headed by Governor Prof. Amir Yaron, has kept the interest rate unchanged at 4%, after two consecutive cuts of 0.25% at each of its previous two meetings in November and January.
Until last week most analysts had expected the Bank of Israel to make a third consecutive cut in the interest rate today. But the possibility of a war with Iran has dramatically changed the picture and made the Bank of Israel more cautious. In its announcement today the Bank of Israel cited, “Geopolitical uncertainty has resurfaced in recent days in view of a potential confrontation with Iran, and Israel’s risk premium increased slightly.”
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Iran concerns hit interest rate cut likelihood
On inflation, the Bank of Israel was upbeat, suggesting that cuts will follow if and when the Iran situation is resolved. The Bank said, “The development of annual inflation is in line with previous assessments. Following the December CPI, annual inflation increased, and following the January CPI, it moderated to around the midpoint of the target range, at 1.8%.”
The Bank added, “Since the previous interest rate decision, the shekel has strengthened by 1.1% against the US dollar, and by 0.4% against the euro.
“The first estimate of national accounts data for the fourth quarter of 2025 shows that the quarterly growth rate was 4% (seasonally adjusted in annual terms) – above the long-term trend.”
Published by Globes, Israel business news – en.globes.co.il – on February 23, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.
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